JUDGMENT
R.J. Kochar, J.
1. The petitioner is a learned advocate practising in the City Civil Court and in the High Court. He has filed the present two petitions under Section 439 read with Sections 433 and 434 of the Companies Act, 1956, alleging failure on the part of the companies to pay his debt as mentioned in the petition which according to him is the amount of his professional fees payable by the companies as per his memo dated March 24, 2001. The petitioner appears to have been practising law for a period of 35 years. According to him, ordinarily he does not accept any High Court brief without advance payment of Rs. 10,000. He has further averred that since he knew Shri Sharma, the manager of the company at his request certain small amounts were accepted by the petitioner in the beginning and work was done by him. According to the petitioner, the bills for the professional work done by him were absolutely reasonable considering the fact of the number of years of practice which he has put in and considering the fact of the work which he was doing for the companies. The petitioner has further averred that the companies have no defence of any nature and that they are liable to pay the bill amounts claimed by the petitioner as the debt. According to the petitioner, since the companies have failed to pay the aforesaid debt it shows their financial insolvency and, therefore, he prayed for winding up of the companies. According to the petitioner, such companies have no right to exist and continue and if allowed to be continued they shall incur further liabilities which they would not be in a position to discharge. He has further alleged that the scheming directors of the companies shall fraudulently misappropriate the properties of the companies and make it appear that the companies do not have sufficient finance and put their creditors in a helpless condition. On the basis of the aforesaid allegations, the petitioner prayed for appointment of the provisional official liquidator with all powers to take over all assets, credits and properties of the companies. The petitioner has further alleged that if no provisional official liquidator is appointed the companies are likely to play fraud with their creditors. The learned advocate has specifically averred that he had sent several letters and telegrams calling upon the company to make payment of the debt being his professional fees payable to him. The petitioner has further averred that that two representatives of the company met him in his office for settling all the matters together. But instead of paying the bill amounts the petitioner was offered a very small amount which he refused to accept. The petitioner has further averred that thereafter he sent a statutory notice under Section 434 of the Act to which there was no reply. The petitioner has also averred that he was also attending the legal work of the sister concerns of the company. The petitioner has also averred that at the time of filing of the suits the company was making payment of court fees and very small amount towards the professional fees of the petitioner. It further appears that the company sent a telegram requesting the petitioner to hand over all the files which he was holding and also to send his fee-account and amounts received so far and utilised for court fee etc. The company had also stated in the said telegram that on getting the statement checked from their records they will settle the account and pay the outstandings. It appears that the said telegram was responded by the petitioner by sending the notice dated August 8, 2001, under Section 434 of the Companies Act.
2. I have heard Shri Kurup, the learned advocate in person as the petitioner himself. I have also heard Shri Kanchan the learned advocate for both the companies. In my opinion, the purpose of the petition is absolutely clear. The petitioner has filed the present petitions to pressurise the companies to pay his professional fees. The purpose of the provisions of winding up is not proceedings to pressurise the company for recovery of the debts which are bona fide disputed. In the present case the company has sent a telegraphic reply requesting the petitioner to send the account in order to check up their records and to strike the balance payable to the learned advocate for his professional fees and to account for the court fees paid by the company to the petitioner for filing the suits. From this reply it is clear that the company has never refused to pay the alleged debt which the petitioner is claiming from the company. What the company wanted from the petitioner was a statement of account, as both of them appear to have a long standing relationship of advocate and client. I do not find anything wrong on the part of the company in requesting its advocate to furnish a full statement of account to tally with its own record to find out what amount was actually payable to the petitioner. It is an admitted position by the petitioner that he has been doing the professional work for the company as well as its sister concerns. It is also an admitted position that the company has been making payment towards the court fees and also some advance payment to him at the time of filing of the suits, If in such circumstances the company wanted to settle the entire account with the learned advocate after getting the statement from him it cannot be said that the company has failed and neglected to make payment of its debt. Every client has right to get full details and information from his advocate in respect of the payment of court fees and also in respect of payments made by the client to his advocate towards the professional fees. It is not that the legal practitioner is not accountable to his client. It is more so in the case of corporate clients as their accounts are subjected to audit. In fact the advocate must disclose the receipts and expenditure incurred by him while performing the professional work for his client from time to time. The petitioner ought to have furnished all the details which the company required, instead, however he sent a statutory notice of winding up of the company. From the facts which are disclosed by the company it cannot be said that the debt claimed by the petitioner is not bona fide disputed. It in fact wanted to know from the petitioner the particulars of his fees and the court fees amounts to enable it to ascertain the debt before it could be disputed. It is not even disputed by the company as it merely requested the petitioner to furnish the details to enable it to draw the final balance payable to the petitioner, if any. In the aforesaid circumstances in my opinion the company petition for winding up of the company cannot be maintained at all.
3. Beyond the memo of fees sent by the petitioner to the company there is nothing on record to establish the debt of the company which is admitted or accepted as payable to the petitioner. On the contrary the company has requested the learned advocate to furnish the details of the court fees paid by him on behalf of the company and also the amounts received by him towards the advance payment made by the company as professional fees. It is a simple case of running account between the petitioner and the company as his client. In my opinion such proceedings are nothing but oppressive in nature which cannot be entertained. I am also of the opinion that the present petition is nothing but an abuse of the process of the law. The learned advocate who himself is the petitioner ought not to have filed such a petition. He ought to have availed of the remedy of filing of a civil suit for claiming his professional fees on the basis of the contract between the parties. Further, beyond making a bare statement and allegation of defamatory nature that the directors of the company are “scheming” and that they would fraudulently misappropriate the properties of the companies and that the companies are financially insolvent, there is absolutely no case made out even to prima facie substantiate such serious statements of allegations made against the running business of companies. There is nothing on record to show that the companies’ net worth is much lower than their liabilities or that they have lost their substratum to enable this court to consider the case for winding up of the companies. The petitioner as a responsible senior member of the Bar ought to have avoided to make such serious allegations in order to recover his professional fees of Rs. 54,500 from these companies. I am of the considered opinion that the petitioner has not been able to make out a case for winding up of the companies under Section 433(e) or (f) of the Act. It is not at all just and equitable to entertain such a petition filed by the petitioner who has equally efficacious alternative remedy of filing a civil suit to recover his alleged professional fees. The petitions therefore are liable to be dismissed.
4. Shri Kanchan the learned advocate for the company has made a serious grievance against the petitioner that not only the petitioner did not furnish the accounts but also retained the briefs and files which he was holding on behalf of the company as its professional retainer. According to the learned advocate, the petitioner ought to have returned the briefs/files and other papers and ought not to have retained them for the purpose of his fees. Shri Kanchan has submitted that his clients are seriously prejudiced by the fact that the petitioner has kept a lien on the proceedings to pressurise the company to make payment of the fees without any accounts being furnished. In my opinion the grievance of Shri Kanchan is justified. In the present case the petitioner is claiming his professional fees for the work in the proceedings which are not concluded. The Supreme Court in the case of C. S. Venkatasubramanian v. State Bank of India has observed as under (page 255) :
“It would appear that he also insisted upon an apology from the officer by writing the letter. In the circumstances stated above, the officer rightly had not given any apology. The question is whether the court should have given a conditional leave to counsel to appear on behalf of the respondent-bank for conducting the suit. Shri F. S. Nariman, learned senior counsel for the appellant, contended that under Order III, Rule 4(2) of the Civil Procedure Code read with Rule 20A of the Civil Rules of Practice it is open to the parties either to change counsel or engage a new counsel with the consent or with the leave of the court. Until the leave is granted, counsel who entered appearance on behalf of the parties is entitled to remain on record. As a condition for his withdrawal from record and giving consent to another counsel to appear on behalf of the respondent-bank, the appellant is entitled to insist upon payment of the fees. That was not acceded to by the trial court and in the revision the High Court in the impugned order in C. R. P. No. 711 of 1996, dated March 29, 1996, has confirmed the order of the Subordinate Judge. Until the proceedings are concluded the appellant has no right to collect the fees as a matter of course. We find no force in the contention of Shri Nariman. The appellant cannot insist on payment of fee as a condition to give consent. The conduct of counsel led to loss of confidence in him by the respondent. Therefore, the respondent-bank is entitled to change counsel. But in view of the facts and circumstances that the respondent had lost faith and confidence in the appellant to the successful conduct of the suit, they necessarily had to change the advocate and the appellant had wrongly refused to give consent. The court was right that he is not entitled to payment of the fees as a matter of right. The appellant cannot insist upon the payment of the fees until the proceedings are concluded. He may be left free to recover the same from the respondent.”
5. The point in respect of right of an advocate to retain the files entrusted to him by his client for the professional work performed by him on behalf of the client has been very well settled in the aforesaid judgment of the Supreme Court. This point has been further crystallised by the latest judgment of the Supreme Court in the case of R. D. Saxena v. Balram Prasad Sharma (K. T. Thomas and R. P. Sethi JJ.). The Supreme Court has dealt with the point exhaustively and has commented upon the rights and duties of the professional lawyer in the noble profession. It would be of great importance and immense value to imbibe upon the learned advocates in that regard. I have, therefore, reproduced below various observations of the Supreme Curt contained in the said judgment in the case of R, D. Saxena. I hope and wish that this commandment of the Supreme Court shall be scrupulously observed by the learned advocates (page 90 of 105 Comp Cas) :
“A litigant must have the freedom to change his advocate when he feels that the advocate engaged by him is not capable of espousing his cause efficiently or that his conduct is prejudicial to the interest involved in the Us, or for any other reason. For whatever reason, if a client does not want to continue the engagement of a particular advocate it would be a professional requirement consistent with the dignity of the profession that he should return the brief to the client. It is time to hold that such obligation is not only a legal duty but a moral imperative …
If a party terminates the engagement of an advocate before the culmination of the proceedings that party must have the entire file with him to engage another advocate. But if the advocate who is changed midway adopts the stand that he would not return the file until the fees claimed by him is paid, the situation perhaps may turn to dangerous proportion. There may be cases when a party has no resource to pay the huge amount claimed by the advocate as his remuneration. A party in a litigation may have a version that he has already paid the legitimate fee to the advocate. At any rate if the litigation is pending the party has the right to get the papers from the advocate whom he has changed so that the new counsel can be briefed by him effectively. In either case it is impermissible for the erstwhile counsel to retain the case bundle on the premise that fees are yet to be paid . . . (page 91)
We, therefore, hold that the refusal to return the files to the client when he demanded the same amounted to misconduct under Section 35 of the Act. Hence, the appellant in the present case is liable to punishment for such misconduct . . . (page 92)
. . . The lawyer’s rights, obligations and disabilities are, therefore, governed either by the contract or by the statute. He has the right to sue his client for his fees, if not paid, like any other professional. The rights and obligations of an advocate ought to be regulated by keeping the high standards and exalted position of the profession by not treating lawyers as ordinary merchants. Thomas J. has very elaborately dealt with and concluded that the provisions of Section 171 of the Contract Act cannot be pressed into services by an advocate for retention of documents of his client purportedly in exercise of his lien over such case-file papers . . . (page 95)
Thus, looking from any angle, it cannot be said that the case papers entrusted by the client to his counsel are the goods in his hand upon which he can claim a retaining lien till his fee or other charges incurred are not paid. In G, a Senior Advocate of the Supreme Court, In re, AIR 1954 SC 557, this court observed that it was highly reprehensible for an advocate to stipulate for or receive a remuneration proportioned to the result of litigation or a claim whether in the form of a share in the subject-matter, a percentage or otherwise. An advocate is expected, at all times, to conduct himself in a manner befitting his status as an officer and gentleman by upholding the high and honourable profession to whose privilege he has been admitted after his enrolment. If an advocate departs from the high standards which the profession has set for itself and conducts in a manner which is not fair, reasonable and according to law, he is liable to disciplinary action. In M, an Advocate, In re, , this court observed (page 96) :
‘As has been laid down by this court in G, a Senior Advocate of the Supreme Court, In re, AIR 1954 SC 557, the court in dealing with cases of professional misconduct is “not concerned with ordinary legal rights, but with the special and rigid rules of professional conduct expected of and applied to a specially privileged class of persons who, because of their privileged status, are subject to certain disabilities which do not attach to other men and which do not attach even to them in a non-professional character ….. he (a legal practitioner) is bound to conduct himself in a manner befitting the high and honourable profession to whose privileges he has so long been admitted ; and if he departs from the high standards which that profession has set for itself and demands of him in professional matters, he is liable to disciplinary action”. It appears to us that the fact of there being no specific rules governing the particular situation, which we are dealing with, on the facts found by us, is not any reason for accepting a less rigid standard. If any, the absence of rules increases the responsibility of the members of the profession attached to this court as to how they should conduct themselves in such situations, having regard to the very high privilege that an advocate of this court now enjoys as one entitled, under the law, to practise in all the courts in India’.
In our country, admittedly, a social duty is cast upon the legal profession to show the people beacon light by their conduct and actions. The poor, uneducated and exploited mass of the people need a helping hand from the legal profession, admittedly, acknowledged as a most respectable profession. No effort should be made or allowed to be made by which a litigant could be deprived of his rights, statutory as well as constitutional, by an advocate only on account of the exalted position conferred upon him under the judicial system prevalent in the country. It is true that an advocate is competent to settle the terms of his engagement and his fee by private agreement with his client but it is equally true that if such fee is not paid he has no right to retain the case papers and other documents belonging to his client. Like any other citizen, an advocate has a right to recover the fee or other amounts payable to him by the litigant by way of legal proceedings but subject to such restrictions as may be imposed by law or the rules made in that behalf. It is high time for the legal profession to join heads and evolve a code for themselves in addition to the mandate of the Advocates Act, rules made thereunder and the rules made by various High Courts and this court, for strengthening the belief of the common man in the institution of the judiciary in general and in their profession in particular. Creation of such a faith and confidence would not only strengthen the rule of law but also result in reaching the excellence in the profession.”
6. The right to claim and the liability to pay the fees is yet to accrue to become a debt payable by the companies as contemplated by Section 433 of the Act. Besides, the debt as fees is yet to be ascertained. It is therefore beyond any pale of doubt that the petitioner had no right to retain the papers as a condition to receive the professional fees according to his own bills. The petitioner as a practising advocate of this noble profession needs to be reminded of what Justice Krishna Iyer has said that, “law is not trade, briefs no merchandise”. The petitioner could not have retained the briefs as merchandise as a charge over them to get his fees as claimed by him. In case the company failed to make payment as per the contract the petitioner had other civil remedy open to recover his professional fees. In my opinion he ought to have gracefully and honourably returned the papers and ought not to have made a condition precedent to receive the professional fees. Shri Kanchan is further right in his submission that the company had never refused to pay the professional fees of the petitioner but it had only requested the petitioner to furnish the accounts. To show its bona fides at the intervention of the court the company has handed over two cheques of Rs. 38,000 and Rs. 16,500 towards the fees of the petitioner as claimed by him without questioning the propriety or otherwise of the claim. Shri Kanchan has indeed acted with required professional dignity in asking his client to make payment of the aforesaid amounts to the petitioner as suggested by me without prejudice to dispute the claim.
7. Since Shri Kurup was not present in the court in the morning session as he was busy somewhere else the aforesaid cheques were handed by Shri Kanchan to the Company Registrar of this court. These two cheques were handed over to Ms. Vijayalaxmi, the junior advocate of Shri Kurup. She has undertaken to hand over the said cheques to Shri Kurup who in turn would hand over the briefs, papers and files as per the list submitted by the company to the representative of the company who is present in the court.
8. It is clarified that the aforesaid two cheques are in respect of the company Phulchand Exports Ltd. and Rivian Textile Mills Pvt. Ltd. Shri Kurup who is now present in the court has received the cheques and has handed over the papers relating to the matters of the aforesaid two companies. It is further clarified at the instance of Shri Kurup that it would be open to him to institute a suitable civil proceeding for recovery of the other amounts from the other companies mentioned in his notice dated March 24, 2002. These two payments do not cover the other companies mentioned in the said notice. It would be open to the companies to dispute the claims of the petitioner.
9. The company petitions are dismissed as above with no order as to costs.